updated 10/21/2010 9:16:55 AM ET 2010-10-21T13:16:55

HOUSTON, Oct. 21, 2010 (GLOBE NEWSWIRE) -- Holloman Energy Corporation (OTCBB:HENC) announces execution of a Memorandum of Understanding for the acquisition of additional Australian-based exploration rights and other assets. Under the Agreement, Holloman Energy may acquire application rights in up to seven exploration permits ("EPCs') targeting 1.65 million acres with coal-seam gas potential, together with certain drilling rigs and associated drilling equipment from an affiliated company.

"It's been 8 months since extraordinary flooding halted exploration by virtually all participants neighboring our Cooper Basin concessions," stated Mark Stevenson, Holloman Energy CEO. "Some activity in the Cooper has restarted and with it, interest in our PEL 112 and PEL 444 acreage has begun to reignite. In addition, recent discussion with potential venture partners has highlighted an interest in certain Queensland-based acreage positions held by one of our affiliates," Stevenson continued. "We've watched as the market's focus on coal-seam gas has grown. We now believe it's time to add our EPC application rights to the Holloman Energy portfolio. This is the first in a series of planned steps to diversify our on-shore exploration efforts and moderate the land-access risks, such as the flooding, we've faced in the past. Having a broader on-shore portfolio is a strategy that's worked well for certain of our larger competitors, and we believe will make Holloman Energy a more attractive joint venture partner."

The Queensland, Australia-based, EPCs under application target Permian and Jurassic coals. They cover more than 1,783 sub-blocks (6,666 sq km / 1,647,070 acres) largely in the Adavale Basin area. If the acquisition is finalized, the Company will undertake additional studies to determine whether economics support its pursuit of an Authority To Prospect for coal-seam gas resources. The inventory of drilling assets includes three drill rigs, a vehicle fleet and certain camp support equipment. Holloman Energy is performing a detailed review to determine what portion, if any, of the equipment inventory suits its current needs.

The Agreement between Holloman Energy and its affiliate sets an acquisition price that approximates the cost basis of the individual assets selected for acquisition. The Agreement is subject to standard contingencies including; the completion of satisfactory due diligence, definitive agreements, and required approvals.

About Coal-Seam Gas

What is coal-seam gas?

Coal-seam gas (CSG) is a form of natural gas trapped in the molecular structure of coal beds. The gas is usually produced from coal that is either too deep or of too low quality to be mined commercially.

In contrast, conventional natural gas is stored in the gaps between rock formations. As a result, coal-seams can contain significantly higher quantities of gas than are found in conventional reservoirs.

Q: How do you produce coal-seam gas?

The process begins by drilling a well up to 600 meters below ground. The top section is cased with steel and cement and a special rotating blade is lowered to the bottom section to dig cavities in the coal-seams.

Water and gas are pumped from the well and extracted using separate pipes. The gas is cleaned, processed and compressed before being fed into commercial pipelines.

Q: Why is there such interest in the industry in Australia?

In the past decade, CSG has become an important source of energy in America as conventional gas reserves have been depleted and the technology to extract CSG has improved.

It is now taking off in Australia, where huge reserves exist and where there is a vast and growing market for energy exports to nearby China and southeast Asia. CSG now represents 40 per cent of Australia's onshore gas reserves.

Oil companies such as BG Group, ConocoPhillips and Petronas have all invested in Australia's coal-seam gas industry in recent months.

Additional information on CSG:

Coal-Seam Gas Producers - The New Masters Of The Universe?

http://peakenergy.blogspot.com/2008/10/coal-seam-gas-producers-new-masters-of.html

Coal-Seam Gas Poised to Explode in Australia

http://www.powermag.com/issues/departments/global_monitor/Coal-Seam-Gas-Poised-to-Explode-in-Australia_2285.html

About Holloman Energy

Holloman Energy Corporation is focused on exploring and producing oil in Australia's Cooper Basin. Holloman's Cooper Basin leases include interests in PEL 112 and PEL 444 which comprise 4,544 Sq km (1.125 million acres) in the southwest and northwest sectors of Australia's prolific Cooper – Eromanga Basin.

Forward-Looking Statements: This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the Company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations and changes in consumer and business consumption habits and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to publicly update any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's recent filings with the SEC.

ON BEHALF OF THE BOARD OF DIRECTORS

Holloman Energy Corporation

http://www.hollomanenergy.com

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

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